| Subject: DJ: Timor Sea Talks Focused On
Creative Solution
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We will die without the oil: Gusmao
Wednesday April 20, 2005, 6:41 pm
UPDATE: Timor Sea Talks Focused On
Creative Solution
By Veronica Brooks
Of DOW JONES NEWSWIRES
CANBERRA (Dow Jones)--Australia's Foreign Minister Alexander Downer
said Wednesday maritime boundary negotiations with East Timor will resume
next week, marking the sixth meeting in a year as the two sides move
closer to a deal.
Downer said the April 26-28 meeting in Dili will concentrate on East
Timor's proposal outlined last month for a "creative solution"
that would allow oil and gas projects in the Timor Sea to go ahead,
pending a permanent boundary being settled.
In particular, agreement on the proposal would enable the US$5 billion
Sunrise liquefied natural gas project to begin, while in the longer term
providing significant infrastructure and industry development for East
Timor.
But Downer said he is cautious about whether a resolution is near.
"We've been very optimistic about these talks in times gone by and
then the next round of talks haven't been so successful," he told
reporters.
"So I think we'll be more cautious in our expressions of how we
think the talks will go at this stage. We can just be hopeful that they
will gradually lead to a resolution of the differences between Australia
and East Timor," Downer said.
The last round of top-level diplomatic negotiations was held in
Canberra in early March.
"Under East Timor's proposal, both countries would continue to
work together to exploit the Timor Sea petroleum resources, giving East
Timor 90% of the royalties from the Joint Petroleum Development
Area," Downer said.
"Significant revenues are already flowing to East Timor, and based
on recent oil prices East Timor will receive about US$14.5 billion in
revenues over the next 20 years - an average of almost US$2 million per
day," the minister said.
Impoverished East Timor's economic well-being rests on Dili's bid for a
major redistribution of royalties from the vast oil and gas deposits that
lie beneath the sea that divides the two countries.
Negotiations broke down acrimoniously in October last year, prompting
oil and gas producer Woodside Petroleum Ltd. (WPL.AU) to shelve its
Sunrise project.
The breakdown meant Woodside couldn't meet its end-2004 deadline for
legal and commercial certainty that would allow it to capture a 2010
marketing "window" for LNG exports.
Woodside has said it won't spend any more money to advance Sunrise and
has reassigned staff to other projects.
Woodside owns 33.4% of Sunrise, regarded as the richest prize in the
Timor Sea. Its partners are ConocoPhillips (COP) with 30%, Royal
Dutch/Shell Group (RD) with 26.6% and Japan's Osaka Gas Co. (9532.TO) with
10%.
Australia and East Timor have agreed to an interim revenue-sharing deal
covering a part of the Timor Sea that takes in the ConocoPhillips-operated
Bayu Undan field.
This Joint Petroleum Development Area splits the government revenues
90%-10% in East Timor's favor.
But East Timor has so far refused to ratify a second revenue-sharing
deal known as the International Unitization Agreement. Under this deal,
80% of Woodside's Sunrise gas field would fall within Australian waters
and the remaining 20% in the JPDA.
If Dili's "creative solution" gets the green light,
negotiations between Australia and its northern neighbor on a permanent
boundary would be postponed for decades until the Sunrise resource was
exhausted.
And if the parties resort back to thrashing out a permanent maritime
border, this process would take many years.
In terms of a permanent boundary, Dili wants a border in the middle of
the 600 kilometers of ocean separating the two nations.
However, Canberra argues the boundary should be the edge of the
continental shelf, which in some places is just 80 kilometers from East
Timor's coastline. That border would put the bulk of natural resources in
the Timor Sea under Australia's control.
-By Veronica Brooks, Dow Jones Newswires;
61-2-6208-0901; veronica.brooks@dowjones.com
-Edited by Graham Morgan
---
We will die without the oil: Gusmao
By Tom Allard, Foreign Affairs Reporter April 20, 2004
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East Timor risks becoming a failed state, its President, Xanana Gusmao,
has said in a blunt warning to Australia to ease its hardline position over
the carve-up of $30 billion in oil and gas reserves.
Australia and East Timor are locked in antagonistic negotiations over the
Timor Gap oil and gas fields. Australia has rejected East Timor's claim for
the maritime boundary to be halfway between the countries.
The existing boundaries favour Australia and are the result of
negotiations with Indonesia, the former ruler of East Timor. Several
lucrative oil deposits are in Australian areas despite being nearer to East
Timor.
"It makes the difference to our future," Mr Gusmao told The Guardian. "We
would not like to be a failed state. Without all this we will be another
Haiti, another Liberia, another Solomon Islands, and we do not want that."
Mr Gusmao said East Timor remained desperately poor, with much of its
infrastructure ravaged by the conflict in 1999 and little but natural
resources on which to base its economy.
"How can we prevent poverty if we don't have money?" he said. "How can we
reduce disease, how can we stabilise the country, how can we strengthen the
democratic process, how can we strengthen tolerance . . . if we don't have
money?" advertisement
The strongest rhetoric yet from East Timor comes as its relations with
Australia deteriorate. Australia has already received $1.7 billion from
deposits in disputed areas, including the Greater Sunrise, Laminara, Buffalo
and Corallina oil fields, which lie substantially or completely outside the
joint petroleum development area.
East Timor receives 90 per cent of the revenues from the area and the
rest goes to Australia. Australia gets all the revenue from nearby oil
assets outside the area.
If the boundary was changed to halfway between the countries - the
standard for international maritime law - many lucrative oil fields would go
to East Timor.
Then East Timor would earn $US12 billion ($16 billion) in royalties over
30 years instead of $US4.4 billion from a continuation of the interim
arrangements, its Government said.
The Greens' leader, Bob Brown, said Australia's deal with East Timor was
theft. Australia's Parliament has approved, with Labor support, making the
interim boundaries permanent. But it has not passed in East Timor.
"The agreement robs the poorest country in South-East Asia to line the
pockets of the Government and the oil corporations of the richest country in
the region, Australia," Senator Brown said.
More than half of East Timor's population lives on about $400 a year. Its
annual budget is about $100 million, mostly foreign aid.
The fear of failed states on Australia's doorstep has prompted the
Federal Government to revamp regional foreign policy.
The Foreign Minister, Alexander Downer, said the complaints were "part of
the negotiating process". He expected talks to stretch well beyond talks in
Dili this week.
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